METALS - COPPER TOUCHES 8,000 USD ON FEARS OF EXTENDED PROTEST AT GRASBERG
04/20/07 02:31 pm (GMT)
etv
LONDON (Thomson Financial) - Copper touched the key 8,000 usd a tonne mark in afternoon trades after workers at Freeport McMoRan's Grasberg mine in Indonesia said they would continue their protest for up to a month if their demands for better welfare were not met.
Grasberg, one of the world's largest copper and gold mines, is already running well below capacity, with protesters having stayed away from work for three days running now.
"The turn for the worse in terms of the Grasberg situation is what is behind copper's climb today, and we think prices could push higher into next week if there are no signs of a resolution," said Man Financial analyst Ed Meir.
LME copper for three month delivery was quoted at 8,000 usd a tonne in the afternoon floor trades, up from a close of 7,825 usd a tonne on the kerb yesterday.
The metal rose in early trades as worries receded over possible rate hikes in China and after London Metal Exchange data showed warehouse stocks declined for a fourth day running.
The LME said in a daily report copper stocks held in its warehouses fell by another 1,150 tonnes to total 169,075 tonnes, while cancelled warrants -- metal set to be removed from warehouses -- rose to 19,250 tonnes.
The fall in inventory took overall stocks to a four-month low and sparked concerns the market might tighten further, especially as demand from China is still strong.
Chinese copper imports rose to record levels in March. Meanwhile, data out yesterday showed the Chinese economy grew by a larger than expected 11.1 pct in the first quarter.
The data sparked a sell-off in Chinese equities amid fears the Chinese authorities might raise rates in an attempt to curb the booming economy. Base metals prices also fell on the rate hike fears.
However, those fears receded today as market participants took the view that strong economic growth in China is good for metals, even if it leads to further monetary tightening.
"This (Chinese GDP data) should not be seen as a negative with the government needing to take steps to prevent the economy from overheating and maintain expansion at a more sustainable rate," said UBS Investment Bank analyst Robin Bhar.
Aluminium was up at 2,850 usd a tonne against 2,845 usd, as LME inventories dropped and as the metal managed to recover from price falls yesterday that followed huge increase of nearly 12,000 tonnes in LME stocks.
"Aluminium still hasn't broken solidly through the 2,900 usd a tonne level for a real assualt on 3,000 usd, but strong support is now evident between 2,760 usd and 2,800 usd," said Alex Heath, head of base metals at RBC Capital.
Nickel was up at 48,850 usd a tonne against 47,525 usd, amid yet another decline in LME inventories, which fell by 210 tonnes today to total 4,065 tonnes.
"Still critically low stocks underpin nickel, while lead and zinc continue to derive support from this week's positive International Lead and Zinc Study Group data showing global inventories remain very low," said Bhar.
Lead was up at 1,980 usd a tonne against 1,930 usd while zinc was up at 3,700 usd a tonne against 3,600 usd.
Tin was up sharply, rising to 13,850 usd a tonne against 13,700 usd as the metal recovered from sharp falls this week, which followed news Indonesia granted export permits PT Koba Tin, the country's second biggest producer.
The news indicated supply from Indonesia, the world's second largest tin producer, is recovering after having been disrupted for much of this year because of a government crackdown on illegal tin mining.
maytaal.angel@thomson.com
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